First Bank Company holds a note from Jason Black and the first mortgage on real estate owned by Jason Black to secure it. Mr. Black sold his property to Robert Frasca, and Robert Frasca assumed the mortgage. The bank did not give Mr. Black a release from his debt. Subsequently, Mr. Frasca defaulted in payment on the note. After some negotiating, the bank extended the term of the note and increased the interest rate. What is Mr. Black’s position at this stage of the transaction?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
First Bank Company holds a note from Jason Black and the first mortgage on real estate owned by Jason Black to secure it. Mr. Black sold his property to Robert Frasca, and Robert Frasca assumed the mortgage. The bank did not give Mr. Black a release from his debt. Subsequently, Mr. Frasca defaulted in payment on the note. After some negotiating, the bank extended the term of the note and increased the interest rate. What is Mr. Black’s position at this stage of the transaction?
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